Growth is slowing, inflation is very low, the country's
demographics mean its workforce will soon stop growing. It has
also failed to put a stop to its considerable debt
accumulation in recent years.

But according to Stephen King, outgoing chief economist at HSBC,
that way of telling the story ignores China's role as the
heavy-lifter in the global recovery — the economy that's been
able to take a beating on behalf of the rest of the world.

King calls China "the shock absorber for the global economy, a
punch bag seemingly able to soak up the recessionary blows that
would otherwise have totally derailed global growth."

In inflation-adjusted terms, no other major currency has come
close to the Chinese yuan in terms of appreciation against the
dollar since 2010.

Here's how it looks:

HSBC

King notes that without that surge in the exchange value of the
yuan (or renminbi), other countries' economic policy would have
been tighter by definition. For example, a weaker euro to the
yuan will boost French and German exporters at the expense of
Chinese exporters, which will immediately find it more difficult
to sell goods in the European market.

IMF

He goes on to say that colossal Chinese investment — and
debt accumulation — helped to prop up commodity prices.

That's left China with a pretty massive fiscal deficit, which
the
IMF says is worth nearly 10% of GDP when including off-budget
items (see the chart to the right), but without taking that hit,
King says that "many emerging nations would have found themselves
short of export revenues and, in some cases, would have been
faced with immediate balance of payments crises."

China’s role as a “stabiliser” for the global economy has
contributed to instability within China itself. Yes, the global
economy has done better as a consequence of China’s behaviour
but, for China, there have been significant costs: an overheated
property market, a substantial increase in indebtedness, a
roller-coaster ride for the stock market, a highly leveraged
shadow banking system and a declining marginal rate of return on
capital spending...

It is easy to criticise China’s internal imbalances. Doing so
without taking into account the role of those imbalances in
stabilising the global economy is, however, a major mistake. It
doubtless makes sense for China now to address its internal
imbalances. Yet, in doing so, the rest of the world needs to find
a new shock absorber. It’s not at all obvious whether any economy
is really up to the task.

King takes a look at the case that the US economy can act as
a shock absorber for the world, but argues that growth has been
moderate, rather than spectacular. What's more, massive
appreciation of the dollar could cause American growth to fizzle
out.

And if Europe and Japan are both still definitely in easing
cycles, with more rather than less
quantitative easing quite possible from both in the years
ahead, there doesn't seem to be an obvious shock observer
anywhere on the horizon.